Staffing agencies and in-house bargaining

This paper asks whether a labor market with search-and-matching frictions and firms producing under decreasing returns to labor is better characterized by in-house hiring with intra-firm wage bargaining (Stole-Zwiebel) or by an alternative arrangement in which intermediaries — “staffing agencies” — search for and employ workers and then rent them to producing firms on a frictionless, perfectly competitive market. The paper’s second and central question is what happens when firms can choose their optimal combination of the two arrangements simultaneously.

Agneta Berge | Macro Paper Warehouse

Staffing agencies and in-house bargaining